It’s a hot topic (hence why I’m here writing about it!), People love to discuss it – but what’s actually changed? Let’s look into it for both individuals and businesses.
Individuals: What’s New?
- Income Tax Adjustments – The personal allowance is staying at £12,570, and the tax bands remain the same. You’ll pay 20% on income up to £37,700, 40% from £37,701 to £125,140, and 45% above that. No big shocks there.
- Inheritance Tax (IHT) Reforms – From April 2026, agricultural and business property exemptions will be capped at £1 million, with anything above that taxed at 20%. Shares listed on the Alternative Investment Market (AIM) will also lose their full IHT exemption, meaning more estates could be hit with a tax bill – We will dive into this more at a later stage, is a hot topic in the countryside.
- VAT on Private Education – From January 2025, private school fees will be slapped with 20% VAT, making it even pricier for families choosing private education.
- Cash for Whistleblowers – Got a tip-off about someone dodging tax? HMRC offers financial rewards to those who report tax evasion. If you provide valuable information that helps recover unpaid taxes, you could get a payout.
Businesses: Key Changes to Note
- Employer NICs Increase – From April 2025, employer National Insurance contributions will rise from 13.8% to 15%, and the threshold where employers start paying NICs will drop from £9,100 to £5,000. Translation? Higher employment costs.
- Corporation Tax Changes – The main corporation tax rate remains at 25%, but some reliefs and allowances are under review, meaning larger businesses could see their effective tax rates creep up. The small profits rate stays at 19% for businesses with profits under £50,000.
- Dividend Taxation – The tax-free dividend allowance has been cut from £2,000 to £500, meaning more business owners and investors will pay tax on dividends. Basic rate taxpayers will pay 8.75%, higher rate at 33.75%, and additional rate at 39.35%.
- Business Rates & Stamp Duty – The 75% discount on business rates for retail, hospitality, and leisure is being cut to 40%. Plus, the Stamp Duty threshold is dropping from £425,000 to £300,000 from April 2025—bad news for buyers.
The Bottom Line
Tax changes always shake things up, and these ones will hit both individuals and businesses. If you’re a business owner, higher employment taxes and reduced allowances could mean less money to reinvest. If you’re an individual, inheritance tax and VAT on private schools could mean reworking your finances. And hey, if you know someone dodging tax, HMRC might even pay you for snitching. Every company and person will feel these differently, so the key is to plan ahead and find ways to work around the changes while keeping as much of your money in your pocket as possible.
